Understanding OEE and the OEE calculation

Manufacturing companies make money by adding value to materials to make products that the customer wants. Most companies use their machines to add this value. This is why it is so important for machines to be operating effectively, with as little waste as possible. OEE (or Overall Equipment Effectiveness) is a measurement tool that is used in TPM (or Total Preventative Maintenance) to reveal how effectively machines are running.

 An ideal machine operates continuously (100% of the time), at full capacity (100%), with an output of perfect quality (100%). In reality however, this is not always possible. The objective of OEE is to calculate the losses which occur on machines so that you are able to improve the productivity and effectiveness of those machines.

 In order to be able to calculate where a machine suffers losses, an OEE calculation must be done. The OEE calculation will provide results that demonstrate the machine’s effectiveness, revealing where the losses occurred.

The main areas of the OEE calculation include:

  • The availability rate of the machine (When is it operating and when it is not?)
  • The performance rate of the machine (Is the machine operating at maximum speed?)
  • The quality rate of the machine (Is the machine producing good products?)

In other words, Availability compares the actual operating time that the machine is taking to make products with the potential operating time of this machine; while Performance compares the actual output of the machine with the potential output which the machine could be producing in the same time; and Quality compares the actual number of products made by the machine with the number of products that meet the customers specifications, in other words, good products.

 The diagram below is an outline of the OEE calculation which demonstrates how losses relate to each other and how they can reduce the effectiveness of the machinery.














The diagram above contains a number of components:

  • The Total operations time shows the total amount of time that a machine is available to manufacture products. For example, during an 8 hour shift, this would be about 480 minutes.
  • The Potential production time (A) represents the amount of time available for production, minus the unscheduled time. Unscheduled time would be time that the machine is not scheduled to produce anything, like during a strike, or during holiday time.
  • The Actual production time (B) is the total time during which the machine was running and producing products. This would be the potential production time, minus any time losses (such as during breakdowns and waiting periods).
  • Theoretical output (C) is what the machine is expected to produce during the actual production time, which is based on its potential maximum speed.
  • The Actual output (D and E) represents the actual amount of products produced. This will be affected by speed losses as well, which would decrease the amount of products produced in that shift.
  • Whereas, Good product produced (F) displays the amount of products which were produced that meet the standards set during specification and are ready to sell. This would be the actual output, minus the quality losses from scrapping and reworking.
  • The grey area on the figure reveals where there has been a total loss of effectiveness. This area also indicates that there are a number of ways to improve good output of the machine.

By working out how much effort it would take to eliminate a loss, the entire team will have a better idea of where to begin with improvements. Haldan Consulting is authorised by the "Father of OEE", Arno Koch, as Qualified OEE Trainers (read more).

 It is important to note that the purpose of OEE is to monitor the machine or process that adds value, and not the productivity of the operator. In other words, OEE looks at how well the equipment or process is working. This is strictly about improvement, and promotes a policy of openly sharing information amongst workers.

Even though OEE has many advantages for manufacturing companies, some people can become overwhelmed by the amount of data that needs to be manually collected and calculated. HaldanMES® was created to simplify this process, by allowing for automation to occur where possible, minimising the amount of manual data input needed. The power of the software lies in its capacity to report losses quickly, to visualize the effect on daily production, and to facilitate effective corrective action.

To view a practical example of this OEE calculation, click here